Estee Lauder: Wide-Moat Beauty Leader at Compelling Discount; We Suggest Investors to Stock Up

We view the shares of wide-moat Estee Lauder as compelling, trading at a 29% discount to our $256 fair value estimate. The stock sold off 27% year to date due to a slow post-COVID-19 recovery in China, but we don’t view the challenges as structural and long term in nature. We expect the firm to return to its historical growth trajectory by leveraging strong brands, tight channel relations, and research and manufacturing initiatives in Asia to reinforce its positioning. Shares of this beauty leader rarely go on sale, and we recommend investors looking for exposure to beauty to stock up on the name.